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DO I HAVE A COMMUNITY PROPERTY INTEREST IN A HOUSE WHICH MY SPOUSE ACQUIRED BEFORE OUR MARRIAGE?
Generally, in California, property acquired by a spouse prior to marriage is considered separate property under family code section 770 while those acquired after marriage are considered community assets under family code section 760. How do you characterize real property purchased prior to marriage but with the mortgage principal paid down using community income or funds during the marriage? The community in this situation acquires a pro tanto interest in the ratio that the payments on the purchase price made with community funds bear to the total payments on the purchase price and any appreciation should be apportioned accordingly. Marriage of Moore (1980) 28 C3d 366, 371, 373, 168 CR 662, 664, 665. Other expenses associated with the property are not considered in the calculation such as mortgage interest, taxes, and insurance. In essence, the real property would accumulate both a separate property and a community property component by the date of separation. The appropriate remedy in this situation where separate property is subsequently paid with community funds is “apportionment.” The process of apportioning between the separate and community property component is laid out in the Marriage of Marsden. In that case, the court determined the ratio or percentage in which the mortgage loan principal was reduced during the marriage and applied that percentage to the appreciation of the real property during the marriage. The community property component would then consist of the reduction in the mortgage loan principal during the marriage plus the portion of appreciation during the marriage applying the ratio discussed above. In the Marriage of Marsden, the real property was purchased by the husband for $38,300 prior to the marriage. The original mortgage was $30,000. By the time the husband got married, the house was now worth $65,000 while the mortgage has gone down by $7,000. Both the appreciation of $26,700 and the mortgage reduction of $7,000 would be separate property since it occurred prior to marriage. Marriage of Madsen (1982) 130 CA3d 426, 181 CR 910. During the marriage until the time of trial, the property has appreciated another $117,500 (property now valued at $182,500) while the mortgage has further declined by $9,200 up to the date of separation. The ratio at which community funds paid down the mortgage ($9,200) during the marriage to the original purchase price ($38,300) amounts to 24.02%. This percentage of the property appreciation during the marriage of $117,500 ($28,223.50) plus the reduction in mortgage balance during the marriage ($9,200) would constitute the community component of the real property. The rest was the
husband’s separate property. The husband in that case was awarded his separate property component of the real property plus one half of the community property component. The Marsden apportionment method is also applicable to situations where a community real property is later transmuted into one spouse’s separate property through execution of a quit claim by the other spouse but is subsequently paid using community funds. Marriage of Broderick (1989) 209 CA3d 489, 257 CR 397. In litigation, the community interest in the situations mentioned about is proven through expert witness testimony typically by a forensic CPA. Since California case law allows the creation of a community interest in real property acquired prior to marriage, one has to consider vehicles to protect themselves if you own property and you are contemplating of getting married. There are several ways of avoiding the creation of a community interest on your separate real property. One, you can sign a prenuptial agreement. Two, the parties can execute a postnuptial agreement if the parties are already married. Three, the parties can execute a transmutation agreement with a waiver of any family code section 2640 reimbursement claim. If your divorce case involves complex issues of asset distribution, it is best to retain the representation of competent counsel. Please note that this article is not legal advice and is not intended as legal advice. The article is intended to provide only general, non-specific legal information. This article is not intended to cover all the issues related to the topic discussed. The specific facts that apply to your matter may make the outcome different than would be anticipated by you. This article does create any attorney client relationship between you and the Law Offices of Kenneth U. Reyes, APLC. This article is not a solicitation. Attorney Kenneth Ursua Reyes is a Certified Family Law Specialist. He was President of the Philippine American Bar Association. He is a member of both the Family law section and Immigration law section of the Los Angeles County Bar Association. He is a graduate of Southwestern University Law School in Los Angeles and California State University, San Bernardino School of Business Administration. He has extensive CPA experience prior to law practice. LAW OFFICES OF KENNETH REYES, APLC is located at 3699 Wilshire Blvd., Suite 747, Los Angeles, CA, 90010. Tel. (213) 388-1611 or e-mail kenneth@kenreyeslaw.com.
IN HANDWRITTEN LETTER
Darwin told PMA of ‘punishment’ because he overspent allowance
Cadet Fourth Class Darwin Dormitorio told the Philippine Military Academy how he was beaten up by his supposed buddies among upperclassmen because he had already spent half of his allowance meant for a certain period of time. According to James Agustin's report on "24 Oras", Dormitorio in his own
handwriting said he was made to do pa i n f u l a nd st renuous exercises and, when he repeatedly fell to the floor, he was pu nc he d mor e than once in his ribs. "19 Aug 2019 about 2100H in the evening. The 4th class of Echo Company he told to signify the allowance in order to track the allowance spending of plebes," the letter read. "I already spent half of my allowance and it was an offense to my buddies namely Cadet Imperial, Cadet Lumbag" it added in apparent reference to Cadets Third Class Shalimar Imperial and Felix Lumbag Jr.
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"I fell from bridge under bunk many times and hit the floor many times. Cadet Lumbag was very angry and made me raise my arm up high and punched me in the body in the rib part. I was hit a few times more after," the letter read. Dormitorio wrote the letter while the PMA was investigating his confinement at the hospital between August 20 and 27. Police investigators said Lumbag had already been recommended for a one-year suspension and was even told to stay away from the plebes particularly Dormitorio. “One of our suspects, si Cadet Lumbag, was already recommended for one-year suspension but sadly, before it was enforced, ‘yun nga, he was declared off-limits to plebes especially kay Cadet Dormitorio," Baguio City chief of police Police Colonel Allen Rae Co. "But again, Cadet Lumbag violated said provision,” he added. According to sworn statements from 14 witnesses, Dormitorio once again suffered a beating at the hands of upper-
classmen over a missing pair of boots on September 17, a day before he died. Charges are being readied against the three cadets in connection with this incident. Police announced that two more cadets have been identified as suspects on Thursday. According to the investigations, two unnamed 3rd class cadets beat up Dormitorio on the night of September 17. “We closed all the windows nung mga oras na kailangan natin malaman. We traced each and every minute the last hours of the life of Cadet Dormitorio,” Co said. Police said Dormitorio was not only hit in the head by upperclassmen but also electrocuted in his genitals. The suspects also used a flashlight taser to inflict pain on Dormitorio. Five of the cadets who will be facing charges for violating the Anti-Hazing Law are now in the custody of the police.
(GMA News)
FICTIONAL OR NOT? Lacson releases lobby letter from Castro seeking P258 million As the word war between Senator Panfilo Lacson and Capiz Representative Fredenil Castro heats up, the senator released a copy of a letter seeking funding for a project that supposedly came from the congressman. The senator made the document public after Castro said the existence of the purported lobby letter was “fictional.” Lacson claimed that Castro wrote the senator a 60-page letter on September 19 lobbying for financial assistance to construct a P258-million municipal building for the municipality of Dumalag. The senator added that Castro tried to enlist his help to lobby a
project in his district. Tension between the two lawmakers started when Lacson refused to name his source behind his claim that there was an aborted plan to allot P1.5 billion in “pork” for each of the 22 deputy speakers at the House of Representatives and P700 million each to the rest of the solons. “Probably one reason why I get more information than the others is my discipline to protect my sources no matter what. And some pathetic congressmen want me to reveal my sources?” Lacson tweeted on Wednesday. Castro said what he wrote was a "letter-request."
“It was not a lobby letter. It’s a letter-request just like any other letters I sent to other senators,” Castro said in a statement on Thursday. “Lobbying is different. My letter-request shows my resolve to help my constituents. It’s not pork barrel," he said. (GMA News)
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